‘Stamp Duty Land Tax’ (otherwise known as Stamp Duty, is a one-off tax you have to pay when buying a property in England and Northern Ireland. Homebuyers in Scotland and Wales pay ‘Land and Buildings Transaction Tax’ and ‘Land Transaction Tax’ instead.
Stamp duty is charged as a percentage of the amount paid for the property when it’s bought or transferred. So how much you’ll pay will depend on how much you’re paying for the home.
If you’re a first time buyer, you won’t have to pay stamp duty on homes under £300,000 (though currently this is up to £500,000 until 30th June 2021, and after that up to £250,000 until the end of September due to Coronavirus).
For all other buyers, you’ll need to pay stamp duty on homes worth over £125,000. How much you get taxed rises with the property value:
|Property value||Stamp duty rate|
|Up to £125,000||Zero|
|The portion from £125,001 - £250,000||2%|
|The portion from £250,001 – £925,000||5%|
|The portion from £925,001 – £1,500,000||10%|
|The remaining amount, £1,500,001 and upwards||12%|
You’ll need to pay your stamp duty within 30 days of completing your property purchase. If you miss the deadline, HMRC will charge you a fine plus interest - not what you need at an already expensive time!
Expect to pay a bigger rate of stamp duty with a second home - this includes buy-to-lets. Stamp duty on second homes adds 3% on top of the normal rate.
However, if you sell your main residence and move into your second property within three years, you can claim this stamp duty back.
If you’re a first time buyer, you can take advantage of paying no stamp duty on properties worth up to £300,000 (currently up to £500,000 until 30th June 2021 due to Coronavirus).
Outside of this stamp duty extension, buying your first home with a value of up to £500,000 means you’ll only pay 5% tax on the remaining amount over £300,000. Around 80% of first time buyers purchase homes below this threshold, so you can benefit from a big saving if the price is right.
If you’re buying with someone else, then you’ll both need to be first time buyers to take advantage of this discount. Don’t forget, you’ll still need to complete what’s called an SDLT Stamp Duty Land Tax) return, even if you don’t have anything to pay. It’s just a process - your mortgage broker can help you with this.
There are a few circumstances where you might not have to submit a SDLT return:
No money actually changed hands, for instance if the property was gifted to you (though this doesn’t apply if you swapped houses with someone else)
If the home was left to you in someone’s will
If the home was transferred to you after a divorce or separation
You bought the property for less than £40,000
You bought a new lease of seven years or more (as long as it cost less than £40,000 and the annual rent is less than £1,000)
You used alternative arrangements to finance the purchase i.e. religious laws
Stamp duty can feel like a bit of a maze. A mortgage broker will be able to advise you on where you stand with stamp duty. Make an enquiry to speak to one of our friendly experts.
To help the property market get moving again after national lockdown, the UK government originally cut stamp duty until 31st March 2021. Following the UK budget announcement, this has been extended to 30th June 2021. So for now, you don’t have to pay it if the property you’re buying is under £500,000. From 1st July 2021 to 30th September 2021, the cut-off for paying no stamp duty will be £250,000 (£300,000 for first time buyers)
The government’s introduced this tax break to encourage people to buy property after the national lockdown halted the housing market.
Suspending stamp duty means people can save a considerable amount of money. Under the new stamp duty cut, you won’t pay the usual stamp duty fees on a property costing up to £500,000, as long as it’s your main property where you intend to live. If the property costs more than £500,000 you’ll pay a new revised rate on the extra amount. Read more about the stamp duty holiday on the government website.
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